European Market Wrap - 16th September 2026

European bourses traded firmer throughout the session; US equity futures opened in the green. DXY traded sideways ahead of the Fed policy decision; GBP digested the region's inflation report. Crude benchmarks ease off recent highs; Iran's FM said that "we want to return to a peaceful solution". EQUITIES European bourses held onto their earlier gains amid lower yields and energy prices. The downside in energy was helped by constructive comments by the Iranian FM, stating that the MoU with the US is in effect and looks forward to returning to a diplomatic solution. Sectors pointed to a positive picture. Utilities topped the sector pile, followed by Basic Resources and Construction. Autos was the laggard, with Optimised Personal Care and Media rounding out the sector underperformers. Key stories include: Nokia (+3.9%), accelerates AI-RAN adoption as global operators embrace AI-native network evolution on Nvidia platforms; Soitec (+14%), upgraded to overweight at JPMorgan; Barratt Redrow (+10.6%), FY26 revenue beat estimates. US cash equities opened higher, with outperformance in the NDX after reports that SK Hynix (+2.8%) are in talks with Intel (+5.7%) to produce memory chips in the US; however, SK Hynix said it is exploring options and that a decision has not been made. Elsewhere, Apple (+0.6%) is reportedly considering a return to the server market, according to The Information. FX Snapshot: G10s were broadly mildly lower against the USD, albeit only marginally so, as attention remains on the Fed policy decision later. DXY traded within a 99.53-99.75 range, with the peak of the day falling just short of its 100-DMA at 99.80. Earlier, US Retail Sales (topped expectations) spurred two-way action in the Dollar, but ultimately fell following the report. Now focus remains solely on the Fed policy announcement, where rates are expected to be lifted by 25bps. Aside from the decision, focus will be on whether Warsh leans hawkishly; perhaps counterintuitively, a hawkish hike could see yields edge off recent highs, as traders price in greater stability. Note: A full Newsquawk Fed preview can be found on the Research Suite. GBP had regional inflation metrics to digest this morning. Whilst headline rose from the prior (in-line), Core Y/Y and Services were unchanged from the previous month. Therefore, the data is unlikely to shift views at the MPC into Thursday’s confab, where rates are expected to be held steady in a 6-3 vote split. Following the data, Cable saw some two-way action before eventually moving lower as traders curtailed their rate hike bets. FIXED Global fixed income benchmarks are firmer across the board, with Gilts (+67 ticks) outperforming following the inflation report before the open. Headline inflation rose to 3.1% Y/Y, in line with expectations. The worry for the BoE is that this was 0.3ppts above the staff forecasts from the July MPR. On the other hand, the MPC will find some comfort from the absence of second-round effects, with food price inflation holding steady at 1.3% Y/Y (BoE forecast: 2.0% Y/Y). Therefore, the data is unlikely to shift views at the MPC into Thursday’s confab, where rates are expected to be held steady in a 6-3 vote split. In terms of price action, Gilts fell to a trough of 84.20 before trending higher to a peak of 84.90 and looks set to close near session highs. Also supporting the fixed income space was the downside seen in the energy space. This was helped by constructive comments by the Iranian FM, stating that the MoU with the US is in effect and looks forward to returning to a diplomatic solution. Looking ahead, USTs (+5+ ticks) will be in focus as markets prepare for the FOMC rate decision at 19:00BST, with a press conference by the Fed Chair 30 minutes later. Markets are pricing in a 93% chance of a hike, with hike expectations strengthened following the hotter-than-expected August core CPI print. Further adding to the hike calls are the continued signs of a robust economy, with today's Retail Sales metrics beating expectations. An updated SEP is given at today's confab, so traders will be focused on whether policymakers expect further hikes beyond September. Heading into the rate decision, USTs reside at the top end of their 105-27+ to 106-05+ range. Germany sold EUR 2.12bln vs Exp. 2.5bln 3.40% 2047 and 2.90% 2056 Bund. COMMODITIES WTI Oct and Brent Nov futures extended their pullback from yesterday’s renewed rally as some immediate supply-risk premium unwound following a surprise 7.1mln bbl build in US private crude inventories and reports that the US military and Gulf countries have begun conducting daytime tanker transits through the Strait of Hormuz. Further, the session saw some more conciliatory remarks from the Iranian Foreign Minister following his meeting with his Chinese counterpart, in which the former suggested Iran prefers a diplomatic path. WTI Oct fell to a USD 102.85/bbl low from a USD 105.63/bbl high (vs yesterday’s USD 101.21-106.75/bbl range). Brent Nov fell to a USD 106.66/bbl low from a USD 108.59/bbl high (vs yesterday’s USD 105.10-109.45/bbl range). Dutch TTF remained relatively steady but still at elevated levels as the Middle East conflict continued to sustain concerns around regional energy flows and European supply security ahead of winter. TTF traded around EUR 80.50/MWh within a EUR 79.30-83.28/MWh range. Precious Metals extended their gains as the pullback in oil and Treasury yields provided some relief ahead of today’s FOMC decision, where markets lean heavily towards a 25bps hike. Spot gold rose above its 100 DMA (USD 4,327/oz) to a USD 4,360.50/oz high (from a USD 4,275.76/oz low) after extending above yesterday’s USD 4,317/oz high (vs yesterday’s USD 4,262-4,317/oz range). Spot silver similarly advanced to USD 64.93/oz from USD 63.44/oz before pulling back a touch. Updated Fed projections and Chair Warsh’s guidance remain the key catalysts for the complex later in the session. Base Metals were modestly firmer as risk sentiment improved and Treasury yields eased ahead of the Fed, although this week’s weak Chinese domestic activity data continued to temper the fundamental backdrop while reinforcing calls for further policy support. 3M LME copper remained above USD 14k/t within a USD 14,074.40-14,263.08/t range, while COMEX copper traded around USD 6.42/lb within a USD 6.41-6.43/lb range. Bank of America lifts its Q4'26 TTF Natural Gas price forecast to EUR 100/MWh. US Energy Secretary Wright said 18mln barrels of oil went through Hormuz on Tuesday. Considering invoking the DPA to boost US refining capacity. US oil companies will discuss investments in Venezuela today. Daily oil data covers both refined products and crude oil. Russia's Syzran and Saratov oil refineries have stopped operations after Ukrainian drone attacks, according to reported. Iran's oil minister said reconstruction of damaged oil-industry facilities is progressing well. Germany's Economy Ministry said it is continuously assessing the situation and maintaining ongoing dialogue with all market participants in the natural gas sector; welcomes state-owned energy firm SEFE's intention to step up efforts to fill gas storage. A gold mine collapsed in West Kordofan, Sudan, on Sunday, sources suggest. CBRT Governor said global central banks are rediscovering gold. Russian plans to expand its diesel-export ban through October, according to Russian press. Aluminium Bahrain CEO Al Baqali said damage to smelter from Iranian strike in March has already been repaired; with annual capacity of 1.3mln tonnes. Senior German lawmaker Frei said that a energy price relief must come quickly, RTL TV reported; thinks energy relief measures should come into effect in October, adding that lower sales tax on gasoline would be an obvious step to take. EUROPEAN DATA European Industrial Production (Jul MM) -0.1% vs. Exp. -0.2% (Prev. -0.1%). European Wage Growth (Q2 YY) 3.00% (Prev. 3.40%). European Labour Cost Index Final (Q2 YY) 3.10% vs. Exp. 3.0% (Prev. 3.20%). European Industrial Production (Jul YY) 0.0% vs. Exp. -0.1% (Prev. -0.3%). UK July ONS House Price Index 1.4% (prev. 2%). UK PPI Output (Aug YY) 3.7% vs. Exp. 3.3% (Prev. 3.3%). UK PPI Input (Aug YY) 6.1% vs. Exp. 5.4% (Prev. 5.8%). UK PPI Input (Aug MM) 0.3% vs. Exp. 0.4% (Prev. -0.8%). UK PPI Core Output (Aug MM) 0.3% (Prev. 0.5%). UK PPI Core Output (Aug YY) 2.7% (Prev. 2.7%). UK PPI Output (Aug MM) 0.7% vs. Exp. 0.3% (Prev. 0.4%). UK Retail Price Index (Aug YY) 3.4% vs. Exp. 3.5% (Prev. 3.2%). UK Core CPI (Aug YY) 2.6% vs. Exp. 2.6% (Prev. 2.6%). UK Core CPI (Aug MM) 0.3% vs. Exp. 0.3% (Prev. 0.2%). UK CPI (Aug YY) 3.1% vs. Exp. 3.1% (Prev. 2.9%); Services CPI 3.4% (prev. 3.4%). UK CPI (Aug MM) 0.5% vs. Exp. 0.5% (Prev. 0.3%). UK Retail Price Index (Aug MM) 0.6% vs. Exp. 0.7% (Prev. 0.6%). Italian CPI Final (Aug MM) 0.5% vs. Exp. 0.5% (Prev. 0.3%). Italian CPI Final (Aug YY) 3.3% vs. Exp. 3.3% (Prev. 2.9%). Italian HICP Final (Aug MM) 0.1% vs. Exp. 0.1% (Prev. -1.0%). Italian HICP Final (Aug YY) 3.2% vs. Exp. 3.2% (Prev. 2.9%). NOTABLE HEADLINES UK PM Burnham said that inflation is a concern, but UK economy is showing resilience; Chancellor and "I" will take these issues into the budget. European Commission President Von der Leyen said EU is planning social media curbs for kids and a ban on users under 13. European Comission President Von der Leyen said the EU will move from a trade agreement with Canada to an alliance for the future. Trade. EU and Canada will create a common prosperity and economic security space covering manufacturing, technology, energy, AI, defence and the Arctic. European Union is opening the door for Canada to become the first associate member, a status that does not exist under the bloc's treaties. Defence. Threats are mounting and it is time for an Article 4-style EU security protocol. Announces plans to establish a European Security Council and a new European Instrument for military strategic enablers. EU Commission President von der Leyen said that a stronger, independent Europe is now emerging. Geopolitics:. Dealing with an openly hostile world. Economic Commentary:. Unemployment is towards record lows. EU-China:. The EU's trade deficit with China has reached its tipping point. Are engaged with dialogue with China to rebalance trade. Will use all tools possible to rebalance trade. EU will establish a new European cooperation to help obtain and stockpile critical raw materials. Banking:. Will be putting forward a new banking package. AI:. EU can help shape/tackle AI risks. Will step up efforts with Canada and the UK on this issue. UK PM Burnham faces a significant deterioration in the public finances that will leave him needing to find about GBP 10bln in either tax rises or spending cuts in his first budget, according to The Times's Swinford. TRADE/TARIFFS German Government Spokesperson said Germany is open to discussing new partnership models between EU and Canada but the term associate member needs to be rethought. CENTRAL BANKS ECB Wage Tracker Annual (2026): 2.202% (prev. estimate 2.301%). Riksbank's Business Survey: “There was some concern before the summer, but then things took a turn for the better”; "Demand has strengthened and the cost increases resulting from the war are considered to be manageable". GEOPOLITICS RUSSIA-UKRAINE Russia's Syzran and Saratov oil refineries have stopped operations after Ukrainian drone attacks, according to reported. Ukrainian President Zelensky said if Russia is prepared to agree to an energy ceasefire, it must bar any attacks on energy infrastructure in any form. Russian plans to expand its diesel-export ban through October, according to Russian press. Ukrainian media reported explosions in Kyiv, while Polish military aircraft have been activated amid Russian strikes on Ukraine. MIDDLE EAST Iranian Foreign Minister reiterates Iran is fully prepared to defend its sovereignty, territorial integrity, national security and interests against aggressors, while welcoming diplomatic solutions that secure the rights of the Iranian people. Houthis claim responsibility for recent Saudi attack; said they carried out two military operations, targeting Saudi Aramco in Yanbu with dozens of ballistic missiles and drones and Khamis Mushait Air Base with a number of ballistic missiles. Iran's oil minister said reconstruction of damaged oil-industry facilities is progressing well. US officials reportedly met with Yemeni Houthis in Oman over the weekend, according to sources. Houthis told the US they remain committed to 2025 ceasefire. Yemeni Houthi Spokesperson said an important statement from the Yemeni Armed Forces on military operations inside Saudi Arabia will be released at 14:40 local time (12:40BST/07:40EDT). China's FM said that "We are ready to resolutely defend Iran's rights", SNN reported. Pakistan's military spokesperson said the Mekkah agreement with Saudi Arabia and Turkey will not affect Pakistan's strategic relationship with Iran, stating that the pact is defensive in nature. Pakistani PM condemns the attack from Yememi Houthis in Mecca and called on all parties to exercise restraint and step back from escalation. Iranian MP said "Iran has the upper hand and is in charge of managing the Strait of Hormuz is now an indisputable principle and an objective reality". China's Foreign Minister met with their Iranian counterpart; encouraged Iran and the US to exercise rationality. Urge all parties to take effective measures to reopen the Strait. Supports dialogue between Iran and Gulf states. IRGC Navy political deputy said no vessel in the Persian Gulf, Strait of Hormuz or Sea of Oman moves outside the supervision of the IRGC Navy, adding that Iran can target any vessel anywhere if it wishes, IRNA reported. Iran's Major General Rezaei said "there will be no negotiations until Iran's conditions are met". Yemeni Houthis said they shot down a Saudi F15 fighter jet. Iranian FM Aragchi said "The memorandum of understanding with America is in effect and we want to return to a peaceful solution". "We are not interested in continuing the conflict and we look forward to returning to a diplomatic solution.". "IRGC claims it has downed US drone over Qeshm Island", Al Jazeera. Yemeni forces are to announce a military operation at 08:30 local time (06:30BST/01:30EDT). NORTH AMERICAN DATA US Import Prices MoM (Aug)(MM) 0.7% (exp. 0.4%, prev. -0.3%, rev. from -0.4%). US Retail Sales Ex Gas/Autos MoM (Aug) 1.2% (prev. -0.3%). US Export Prices MoM (Aug)(MM): 0.6% (exp. 0.5%, prev.-1.4%, rev. from -1.3%). US Retail Sales Ex Autos MoM (Aug) 1.4% vs Exp. 0.5% (prev. -0.2%). US Retail Sales YoY (Aug) 6% (prev. 5%). US Retail Sales Control Group MoM (Aug) (MM): 1.4% (exp. 0.4%, prev. -0.4%). US Retail Sales MoM (Aug) 1.2% vs Exp. 0.8% (prev. -0.6%).